How to trade the death of alternative energy

By Cody Willard

A123 Systems is one of the companies in my report, 20 Trades for 2011, which includes 14 stocks I think could double along with 6 stocks I think are set to collapse. Please visit http://Tradesfor2011.com to get the report for $39.

Many of the targeted tax tricks, i.e., welfare, for these alternative energy companies are going the way of the dodo in coming quarters. It will be a very tough proposition for the politicians to extend and/or create new subsidies — though they do sneak some in every tax package that gets passed. Speaking of which, this stock and many others of the alternative energy companies that depend on those subsidies to stay in business, have rallied as the Republican/Democrat Regime come to pass their latest convoluted, but decidedly pro-business/pro-energy tax package.

In any case, these heavily-subsidized alternative energy companies need to have already established steady businesses and customer bases and profitability in these generous times, and this is one that is far from getting there. That said, the company’s got more than $4 per share in net cash, and even though the company’s burning lots of cash and had to admit that their customers are pushing out orders into next year, I probably will cover the stock if and when it falls back into the $5-$6 range, where it was soon after we shorted it the first time. I’d put a $11 or $12 stop loss on the short, just in case the stock goes bubblicious before it goes ugly.

Forget the conflicted and confusing reports from Goldman, Citi, Morgan, JPM, BofA, or the junk you get at Schwab, e*Trade and Ameritrade. Time to get real and get prepared.

A123 Systems is one of the companies in my report, 20 Trades for 2011 which includes 14 stocks I think could double next year and six stocks that I think are set to collapse next year. Visit http://Tradesfor2011.com to get the report for $39.

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About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.